One of Labor's most senior officials has launched a blistering attack on sections of the ALP, warning the party is facing a "potentially catastrophic situation" because of the corrupt behaviour of "B-grade" politicians.

In a speech delivered to the Young Labor movement last night, ALP national vice-president Tony Sheldon pointed the finger at his own faction - the New South Wales Right - and declared the need for change.

"There must be no understating of the gravity of the crisis in my home state, no blame shifting, and no dodging of the responsibility to set things right," he said.

"The headlines about corruption emanating from ICAC (the Independent Commission Against Corruption) and the HSU (Health Services Union) scandal must shame us all into action.

"Our crisis is more than just a crisis of trust brought on by the corrupt behaviour of property scammers and lobbyists.

"It's a crisis of belief brought on by a lack of moral and political purpose."

The ICAC in New South Wales is currently investigating allegations of corruption involving former ministers Eddie Obeid and Ian Macdonald.

Mr Sheldon has described the pair as "B-grade wannabes", declaring the party needed to expunge itself of that culture.

"Like cockroaches, B-grade politicians are able to thrive on the corruption and detritus that lies under the dishwasher."

Like cockroaches, B-grade politicians are able to thrive on the corruption and detritus that lies under the dishwasher.

Tony Sheldon

He says Labor instead needs to foster a culture that promotes justice, equality and responsibility to the community and nation.

Mr Sheldon, who is also the head of the Transport Workers Union, says that cannot be done solely through changing party rules, but by putting forward ideas and policies that reflect the party's purpose.

"I believe that over a long period of time, the philosophy of economic liberalism has taken too firm a psychological hold on our policy elite.

"The memory of what we once stood for has started to fade.

"Some of our MPs and ministers - including some members of this faction - have even called for Labor to become a true liberal or even a libertarian party.

"I struggle to see what else but fading Labor values can account for the inexplicable decisions that sometimes come from Canberra - like (Immigration Minister) Chris Bowen's recent decision to give approval for flight attendants to be added to the 457 visa consolidated sponsored occupation list.

"It gives Qantas the green light to hire overseas flight attendants and prevents those jobs being filled by Australian citizens.

"If we want to save our party, we have to reach out to the Australian people with the values that have always inspired our movement: a just society that empowers every community and every citizen to share in our nation's success," he said.